chapter 11 marketing

Question 1

Physical distribution

Answer 1

refers to activities that move
finished goods from manufacturers to final customers
including order processing, warehousing, materials
handling, transportation, and inventory control.

Question 2

channel of distribution

Answer 2

is a series of firms or
individuals that facilitates the movement of a product from
a producer to a final consumer.

Question 3

Direct channels

Answer 3

from producer to end customer

Question 4

– Indirect channels

Answer 4

include intermediaries or middlemen

Question 5

Distribution Channel Functions

Answer 5

Breaking bulk
Creating assortments
Transportation and storage

Question 6

Breaking bulk

Answer 6

Dividing larger quantities of goods into

smaller lots to meet the needs of buyers.

Question 7

Creating assortments

Answer 7

Provide variety of products in one
location, so customers can conveniently buy many
different items from one seller.

Question 8

Transportation and storage

Answer 8

Occurs when retailers and
other channel members move the goods from the
production point to other locations where they can hold
them until consumers want them.

Question 9

Facilitating functions

Answer 9

Make the purchase process easier
for customers and manufacturers (e.g., offering credit to
buyers).

Question 10

Risk taking

Answer 10

Chance retailers take when they buy a
product from a manufacturer, as the product might just sit
on the shelf if no customers want it.

Question 11

Communication and transaction

Answer 11

When channel
members develop and execute both promotional and other
types of communication among members of the channel.

Question 12

Key Types of Intermediaries

Answer 12

independent Intermediaries

Manufacturer-Owned Intermediaries

Question 13

independent Intermediaries

Answer 13

Merchant Wholesalers

Merchandise Agents or Brokers

Question 14

Merchant Wholesalers

Answer 14

• Full-service merchant wholesalers
• Limited-service merchant wholesalers
– Cash-and-carry wholesalers
– Truck jobbers
– Drop shippers
– Mail-order wholesalers
– Rack jobbers

Question 15

Merchandise Agents or Brokers

Answer 15

Agents and brokers provide services in exchange for
commissions but never take title to the product.
– Manufacturer’s agents
– Selling agents
– Commission agents
– Merchandise brokers

Question 16

Manufacturer-Owned Intermediaries

Answer 16

Producers may set up their own channel intermediaries.
• Perform functions of independent intermediaries while
maintaining control:
– Sales branches
– Sales offices
– Manufacturer’s showrooms

Question 17

– Slotting allowances

Answer 17

are fees paid by producers to

large retailers for access to premium shelf space.

Question 18

Product diversion

Answer 18

is the distribution of a product
through one or more channels not authorized for use
by the manufacturer of the product.

Question 19

Steps in Distribution Planning

Answer 19

Step 1: Develop Distribution Objectives
Step 2: Evaluate Internal and External 
Environmental Influences
Step 3: Choose a Distribution 
Strategy
step 4: develop distribution tactics

Question 20

Step 1: Develop Distribution Objectives

Answer 20

Objectives must support overall marketing goals.
– How does distribution work with the other marketing
mix elements to increase sales, profits, or market
share?
– Specific objectives may depend on nature of the
product (e.g., if product is heavy, a key goal may be to
minimize shipping costs).

Question 21

Step 2: Evaluate Internal and External

Environmental Influences

Answer 21

• What are relevant internal 
and external environmental 
influences?
• How can these factors be 
used or minimized in 
developing the best channel 
structure?

Question 22

Step 3: Choose a Distribution

Strategy

Answer 22

* Number of levels
• Channel relationship
– Conventional
– Vertical
▪ Administered VMS
▪ Corporate VMS
▪ Contractual VMS
– Horizontal marketing system

Question 23

step 4: develop distribution tactics

Answer 23

select channel partners
manage the channel
develop logistics strategies
  order processing
  warehousing
  material handling
  transportation
  inventory control

Question 24

Vertical Marketing Systems (VMS)

Answer 24

• Channel in which there is formal cooperation among

members at two or more levels.

Question 25

Three types of vertical marketing systems

Answer 25

Administered VMS
Corporate VMS
Contractual VMS

Question 26

Administered VMS

Answer 26

Independent channel members
work together due to power of a dominant channel
member

Question 27

Corporate VMS

Answer 27

A single firm owns manufacturing,

wholesaling, and retailing operations

Question 28

Contractual VMS

Answer 28

Channel member cooperation
enforced by contracts that spell out rights and
responsibilities of each member

Question 29

Horizontal Marketing System

Answer 29

Two or more firms at the same channel level agree to work
together to get their product to the customer.
– e.g., airline code sharing agreements

Question 30

Intensive distribution

Answer 30

Maximize coverage by selling

through as many outlets as possible.

Question 31

Exclusive distribution

Answer 31

Limit distribution to a single
outlet in a particular region.
▪ May create gray markets.

Question 32

Selective distribution

Answer 32

Seeks to strike a balance

between intensive and exclusive distribution

Question 33

Step 4: Develop Distribution Tactics

Answer 33

• Distribution tactics relate to two aspects of strategy
implementation:
1. Selecting channel partners
▪ Firms consider economic, competitive, relationship,
and sustainability factors.
2. Managing the channel

Question 34

Channel Management

Answer 34

The channel leader or channel captain is the dominant
firm that controls the channel.
• Channel power derives from different potential sources:
– Economic power
– Legitimate power
– Coercive power

Question 35

Logistics and the Supply Chain

Answer 35

Marketing success depends on more than just plans—
implementation is crucial!
– Logistics plays a crucial role in firm efforts to deliver on
their brand’s promise.

Question 36

Logistics

Answer 36

is the process of designing, managing, and
improving the movement of products through a supply
chain.

Question 37

supply chain

Answer 37

is all activities needed to turn raw materials

into a product delivered to a customer